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June 30, 2015

NIAC Policy Memo: Dispelling Myths of Sanctions Relief Under Iran Nuclear Deal

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Under the April 2nd Joint Statement issued by the United States, its P5+1 partners, and Iran in Lausanne, Switzerland, the parties agreed that the principle of ‘simultaneity’ would govern each party’s implementation of a final nuclear deal. In effect, at the same time that Iran takes certain steps to constrain its nuclear program as part of a nuclear settlement, the United States will relieve its bevy of sanctions laws. In this manner, the parties would retain necessary leverage during the course of implementation to ensure that the other side fulfilled its obligations under a nuclear deal.

While the principle for how sanctions will be relieved (i.e., in reciprocity with Iran taking action to constrain its nuclear program) has been firmly established, confusion continues to exist over several aspects of the proposed sanctions relief to be provided Iran. This memo briefly dispels certain of those misnomers.

1. Not All Sanctions Will Be Relieved

Some believe that the U.S. will relax all of its sanctions targeting Iranian activities anathema to U.S. interests. This is false. The language of the April 2nd Joint Statement is clear: the U.S. will “cease the application of all nuclear-related secondary economic and financial sanctions” imposed on Iran. These are terms of art denoting that the U.S. will likely retain significant parts of its comprehensive trade and investment embargo with Iran, while relieving those nuclear-related sanctions that prohibit foreign parties from engaging in certain transactions with Iran or Iranian parties. As such, Iran will remain subject to U.S. trade sanctions and sanctions not related to Iran’s nuclear program following a settlement to the nuclear issue.

2. It’s Nuclear-Related, Not Nuclear-Specific

Some also contend that there are few sanctions related to Iran’s nuclear program that are not likewise related to other activities of Iran, including its support for international terrorism, its development of advanced weapons capabilities, and its human rights abuses. While this is inaccurate as a statement of existing U.S. law, it also misreads the language of the Joint Plan of Action and the April 2nd Joint Statement. In order for a particular sanction to be available for relief under a nuclear deal, the sanction must be “nuclear-related”, not “nuclear-specific” (which is how some are reading it). The caged understanding that some have brought to the term would prevent U.S. negotiators from being able to get the Iranians to agree to constrain and roll-back significant elements of their nuclear program.

3. U.S. Will Keep in Place Sanctions Specifically Related to Iran’s Terrorism and Human Rights Abuses

The concern that the U.S. will be left without the necessary leverage to tackle other Iranian activities of concern is belied by the fact that substantial U.S. sanctions will remain in place to tackle Iran’s support for international terrorism and its human rights abuses. Far from trading in the store for a nuclear deal, the U.S. will retain the same authorities to sanction troubling Iranian actors as it does much worse groups, including the Islamic State and al-Qaeda. If some believe that the residual sanctions authorities following a nuclear deal are woefully inadequate, then that diagnosis should extend to all sanctions programs administered by the United States.

4. The IRGC Will Remain Subject to U.S. Sanctions After a Nuclear Deal

The Islamic Revolutionary Guard Corps (“IRGC”) is the subject of U.S. sanctions under five separate sanctions programs. For instance, the IRGC is designated for sanctions under Executive Orders 13553 and 13606 for its involvement in Iran’s human rights abuses. These sanctions block all property of the IRGC that comes either within the U.S. or within the possession or control of a U.S. person and threatens to likewise designate for sanctions any person or entity, U.S. or foreign, that provides material assistance to the IRGC, whether it be financial, technological, or otherwise. These sanctions will be maintained long after a nuclear deal is reached and will nullify the benefit to the IRGC of the possible removal of its designation related to Iran’s nuclear program.

5. Sanctions Relief Will Not Be Immediate

Iran will not receive immediate benefit from sanctions relief. First, the deal is likely to take a period of time to implement before which sanctions would be formally relieved in the first place. Second, foreign business will be hesitant to return to Iran until there is a demonstrated track record between the parties that the deal is here to stay. As such, during the early years of a nuclear deal, Iran will receive limited value from the sanctions relief and will not see accelerated levels of economic growth until the latter half of 2016. By that time, Iran will have demonstrated a track record of compliance with its nuclear-related obligations under a deal.

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